London, UK, March 5, 2014 – Benefiting from a period of staggering economic growth and seismic demographic shifts Asia could easily become an aerospace manufacturing and engineering hub for the world, according to Alastair Swift, Global Head of Transportation for Willis Group Holdings (NYSE:WSH), the global risk adviser, insurance and reinsurance broker.
Speaking today at Willis’s Aerospace Conference in Singapore, Swift highlighted Asia’s phenomenal improvement in living standards in recent years and the impact this is having on the aerospace industry. “In line with other industries as user volumes increase it wouldn’t be a surprise to see Asia realise its ambitions and become an aerospace manufacturing and engineering platform for the world.”
“The industry’s push into Asia might have started off slowly compared to other sectors, such as consumer electronics and manufacturing, but demand today for aircraft in the region is surging,” he continued. Aircraft manufacturers such as Airbus and Boeing have projected that over a third of worldwide aircraft deliveries will go to Asia in the next two decades. By 2031, Asia Pacific’s fleet is expected to triple to about 13,500 aircraft.
“We also expect to see Asian aerospace companies vying for ownership of US and European counterparts – just like we’ve seen in other sectors,” added Swift. “While much depends on Asia’s ability to harness strong regional capabilities there’s every chance that Asia could become the preferred manufacturing location for aircraft and components in the not too distant future.”
Commenting on some of the issues faced by Asian aerospace businesses, Swift said: “Operating profitably in a heavily regulated global airline industry is a challenge. Fixed costs are high and fuel prices, which make up over a third of operating costs, have increased relentlessly. Meanwhile, globalised supply chains are inherently complex and interrelated leading to dangerous concentrations of risk.”
Swift also identified companies’ susceptibility to cyber-attacks, the reputational threat posed by social media, Asia’s vulnerability to natural catastrophes, the battle for human talent and public health issues – such as avian flu and air pollution – as some of the biggest risks faced by companies operating in the Asia-Pacific region.
There are, however, many reasons to be optimistic, he said. “Asia is booming, its people are industrious and governments are, for the most part, well organised, responsive and well equipped to manage the issues associated with fast growing economies. A key factor for the success of the aerospace industry in Asia will be the ability of aerospace companies to build dynamic approaches to risk management.”
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